Q: Assuming the takeover of CWB goes ahead, what would be your assessment of risks relating to integration, culture clash, etc.? Do potential benefits outweigh these risks, in your opinion? Is this a buy now or wait and see?
Jack
Jack
5i Research Answer:
NA paid a 100% premium on CWB but the deal makes sense as much of NA's business is concentrated in Quebec still. NA said there are $270M in synergies so it certainly appears worth it from a financial perspecitive. Integration is one of the biggest risks with any acquisition and especially a larger one of this size. If all goes smoothly the synergies and larger prescence for NA could certainly outweigh the risks. We are fine with it for a long-term hold, but we would say wait and see right now, just because there is the potential the deal is not approved by regulators. As we are all aware, a West/East merger will have some difficulties in culture at times.